Last Revised: 8/3/01 17:30

Two years after the Robinson-Patman Act was enacted in 1936, the Non-profit
Institutions Act was enacted as an amendment to the RPA. This amendment exempts
from the requirements of the Robinson-Patman Act many transactions involving
hospitals, libraries, universities and [other] non-profit institutions. The
wording of the statute must be read quite carefully, and even then the courts
have disagreed as to the meaning of the most significant words used in the
statute.

Nothing in the Act approved June 19, 1936 (Public, Numbered 692,
seventy-fourth Congress, second session), known as the Robinson-Patman
Antidiscrimination Act, shall apply to purchases of their supplies for their own
use by schools, colleges, universities, public libraries, churches, hospitals,
and charitable institutions not operated for profit.

From 1936 to 1998, the United States Supreme Court has only referred to the
Non-Profit Institutions Act three times, in 1983, 1987 and 1988. Most of the
United States Courts of Appeals have never mentioned the statute in any
published opinion. Only four U.S. Courts of Appeals have referred to the
statute: the 9th, 8th, 5th and D.C. Circuit Courts of Appeals (in 8 decisions).
Only 15 U.S. District Court opinions have referred to the statute.

The point is that the scope of the exemption is not known and there is
substantial room, under existing case law, for arguing that sales of drugs or
other goods to hospitals, schools, colleges, universities, public libraries and
[other] non-profit institutions are in violation of the RPA, assuming the fact
situation is not clearly covered by the literal terms of the statute.

It should be known that the statute and its exemptions are to be narrowly
construed, according to existing case law. Exemptions are not to be handed out
liberally by the judges and courts deciding cases presented to them.

The courts have held that purchases by government agencies are not exempt
under the Non-Profit Institutions Act because they were not explicitly covered
by the wording of the statute.

Some food for thought. If a federally or state financing health clinic (which
dispenses medical services and low-cost or no-cost drugs) is open to anyone,
does the clinic have any "membership" to whom its services are limited. If not,
isn't the clinic selling drugs to the public in the same way as, and in
competition with, the local drug store across the street?

In such a case, would the courts find any exemption?

Isn't the health clinic just another government agency and not entitled to
any exemption?

Anyway, you see what some of the issues can be under this non-profit
exemption from the prohibitions of the RPA.